Ripple CEO Brad Garlinghouse on how the crypto industry will rebuild

Brad Garlinghouse, CEO of US crypto company Ripple, talks about the future of the business, how blockchain technology is developing, and whether the industry is moving on from its recent traumas with CNBC Senior Tech Correspondent Arjun Kharpal.

It certainly didn’t sound like the SEC or or the chair Gary gansler changed their tone even after the approval of the Bitcoin ETF there was a statement Gary genser said he didn’t endorse Bitcoin uh he still called most other crypto assets Securities is this postering or do you think there’s a

Chance yesc has changed its stance there’s an expression about you know one of the definitions of insanity is doing the same thing over and over again and not expecting a different outcome I think Gary gendler is doing the same thing over and over again and thinks that somehow he’s going to win in

Court he has continued to lose in court uh I do think the chair of the SEC Gary gendler has become a political liability in the United States and I think he’s not acting the best interest of the citizenry he’s not acting the best interest of the longterm growth of the

Economy uh and I don’t understand it and I think at some point you know there will be a new chair of the SEC and I think uh that’ll be a good thing for the American people there were a couple of interesting things after that Bitcoin ETF uh was approved proved in that

Statement one and I paraphrase here was effectively G Gary genter saying just because we allowed the Bitcoin ETF don’t think we’re now going to allow a bunch of other crypto assets the second interesting thing was the price of ether skyrocketed immediately after on hopes that they could now next be an eth ETF

Um what are the chances of that I think it’s a certainty I I I I I’m not going to put a horizon on the time but I think there will be other ETFs for sure X1 there will be other ETFs for sure but but an xof

E1 I love this game we play look uh I am very op that’s fine the sad part of that reality is we have a Bitcoin ETF only because a US court said to the SEC you’re being arbitrary and capricious in your apply of your applic application of

The law what would be sad is if every ETF had to go through that same Journey journey and for Gary gendler to get smacked down by the US court system again that that might be it might be necessary but you know again at some point I think Gary gendler won’t be the

Chair of the SEC and that’ll be a good thing for the American people there’s what the secc does and then there’s what is going on in Washington uh in amongst lawmakers and that’s those are those are linked but also separate now the US hasn’t passed any kind of comprehensive

Regulation around uh crypto assets at this point unlike you know you see in the European Union with Ma and some of the other jurisdictions you mentioned earlier as well to buy um but there are a number of bills trying to make their way through the lawmaking process one of

Those is around stable coins there a number of other others as well um do you think that in 2024 there is the political will given it’s an election year as well to to pass some of these bills and bring them into law I I said earlier I don’t like to predict things B

Based on time and this one I will I think this year there will be uh legislation that passes I I won’t be as uh you know predictive about which one I think it likelihood is that the stablecoin uh Clarity for stable coin I can’t remember the name of the bill that

Has been uh you know going through the the system in Washington DC but I think we will see that in part because the US Treasury wants it right I think the stable coin Market has really surprised people in some ways in terms is solving a real need and I think it only makes

Sense for there to be regulatory Clarity around that I think that’s good for the whole industry and you know one of the things we you said earlier is you know are there skeletons in the closet the stable coin Market because there hasn’t been clear rules of the road uh it’ll be

Interesting as that that comes to frish you know the two primary obviously usdt and usdc I I think they are you know here to stay and I think you’re going to see other entrance in that market too you you said before that the the U the US risks losing some of the leadership

Around around this industry that other countries uh have taken a lead um and a lot of that is due to what the SEC does and the fact there isn’t clear regulation in the US if the regulation does pass this year if there’s clearer rules for the for the road uh for the

For the broader industry does that help will will the US be able to compete with some of these other jurisdiction who took an early lead in in this industry I I for sure yes I I don’t think the the market has passed the US I think it has

Passing and you are seeing I mean look we have publicly shared uh over 70% of Ripple’s hiring last year was non- us despite the fact that there’s still a majority of our employees in the United States why would we want to hire in a market where we have a hostile

Government we have a government who won’t provide the clarity we have asked for where we had to fight for years and spend well well over100 million doar in the court system to fight them so you know there will continue to be a lot of activity I think in London in Dubai in

Singapore or in some of the other uh you know Capital Financial capitals of the world but I think the US eventually figes it out uh I don’t know how to predict what’s going to happen in the election cycle but no matter what there’s going to be you know a shift if

You will and I think we will see a shift at the SEC hopefully to a a new chair that is uh constructive and wants to work with the industry and not put their own agenda ahead of the the American peoples um I’ve been asking you this since 2020 because that’s how long it’s

Been going on for Ripp versus the SEC lawsuit when when do we get a conclusion look but most of it has been resolved right so the SEC filed a lawsuit in December of 2020 so just over three years ago against me against Chris Larson and against Ripple the case

Against uh Chris and Brad myself uh have been dismissed entirely with prejudice meaning they can’t ever bring it back and the case against Ripple they lost on everything they cared about I mean their primary tenant was that xrp is a security and in the judge Torres opinion

What she wrote is xrp is in of itself not a security so I feel very good about that the SEC then asked for approval to appeal that decision and that was denied so I mean look the SEC has lost consistently in this case uh there is a

Piece of the case that continues around institutional sales because investment contracts where Ripple sold xrp to in institutions who wanted to speculate the irony there is you know again the sec’s one of their missions is to protect investors how many of our institutional xrp sales did they lose money

None like what are we arguing about what are we anyway so look that will uh proceed through the court system for a little bit longer but I I feel very good about where we are and I I I frankly really pleased for the whole xrp ecosystem and the whole crypto Market

Benefited immensely from that legal win um just for the last five minutes Brad let’s talk about Ripple what your focus is this year where where you’re going and the future um um for for 2024 where are you putting your energy well a couple things come to mind there

Obviously uh our core product R Ripple payments has continued to grow uh and that’s something we’ll continue to invest in more uh payout markets around the world we uh through an acquisition entered the custody Market in 2023 uh certainly a lot of our investment our incremental new investment in 2024 will

Be invested in the custody business uh is that in ant is that in anticipation of of some of these bigger investors getting in to the markets and well I mean I on one hand I say yes however there’s already a tremendous amount of demand I mean that business is growing

Very quickly we announced publicly just a month or two ago that HSBC is a new uh client of that business so you know these are Big accounts as well as more mid-market accounts the custody business is very real and is going to continue to grow nicely you know I do think Ripple

Thinks about entering other vertical markets so payments custody I think we’ll do other things in 2024 some of the those will probably enter through acquisition uh we’ve been super fortunate to have a very strong balance sheet at a time that uh you know that the market has shifted and the the

Valuations of a lot of these companies is not what it once was that’s been an opportunity for us and so we’re going to continue to play offense and what are the areas that interest you then I was thinking about being your wardrobe consultant no I’m not going to announce

The world you know the key areas but look ripple at its core is a block chain infrastructure company serving Enterprises we started with payments and financial institutions we’ve moved into custody a lot of overlap with those same financial institutions uh but we’re going to expand with that same thematic

Of infrastructure enterprise-based uh it served us well and what what are your uh growth expectations this year what what Revenue growth are you tracking this year will you be profitable this year so you know we have been cash flow positive the last couple of years uh you that has

Been a unique place in the market and allowed us to invest not only in the core of Ripple but also in Acquisitions even you know recently you may have read we did a tender offer to our shareholders we’ve now repurchased uh over a billion dollars of stock from our

Shareholders uh that’s something that’s important to us quite frankly because it is not an immediate term priority to go public uh you know in the United States trying to go public with a very hostile regulator that has to approve your S1 that doesn’t sound like a lot of fun to

Me you know coin obviously had their S1 approved and now the SEC is suing them for doing things that was outlined in their S1 now that as I mentioned there’s a hearing tomorrow in the US about some of that but I think it’s indicative of uh why would we want to subject

Ourselves to an SEC that is openly hostile to this industry so so in terms of an IPO an exit of some sort is that sort of parked to the side at this point yeah you looking elsewhere outside the US for a listing I I mean yes to all of those uh

I don’t think about an IPO as an exit I think about an IPO as a step in the journey uh you know shareholder liquidity is important to me we have investors that first invested in Ripple in 2012 so uh they’ve been in this deal

For you know 11 and a half years and so we want to provide that liquidity which is one of the reasons why we’ve done these tender offers and now per repurchased just over a billion dollars of stock uh you know we have looked at other jurisdictions that have clear

Rules of the road but honestly a lot of people go public because they need to raise Capital yeah Ripple is not really in a place where we need to raise capital and so it it is not a short-term priority we’re obviously keeping that option open uh and we’ll evaluate it you

Know as time continues and we’ll evaluate again as we have uh new Regulators sitting at the United States SEC and I guess some of it’s Market dependent as well last year was an interesting uh you know space with the in the tech World more broadly there were a lot of secondaries BuyBacks but

Very few IPOs the market wasn’t obviously very great for him so I guess it’s also you know how how the broader markets play out as well for sure that’s part of it and not just the public markets but also the crypto markets and you know I think uh coinbase’s stock is

In a much stronger position now than it was a year ago but uh obviously well off its highs from three years ago when it went public so I it’s just not a huge priority we have a lot of capital very strong balance sheet we can continue to play offense through an acquisition

Point of view invest in the business you know as we started this conversation I am very optimistic about the crypto Market in 2024 uh because of those things around putting compliance first right making sure we focused on solving real problems for customers and not just the speculative cycle I think will put

The whole industry and a really good trajectory how do you think the retail investor feels because the you know we know in previous Cycles uh more broadly you know you get the initial bump up sort of at the phase we’re in now and what takes it really to those alltime

High is the the the the fever amongst the retail investors now the last cycle was was special it was a very different crypto winter to one that we had seen before characterized by a lot of bankruptcies a lot of contagion and then obviously the issues with FTX and

Binance as well um do you think the retail investor at this point may be a little bit more cautious this time around this cycle about dipping the toe back in I I think probably yes but you know look uh one of the I think advantages I’ve been around the block

Once or twice I remember the earliest days of the internet as we know it and you know the retail investor really drew the hype cycle of Internet 1.0 and I’m talking about 1999 2000 and then you had a wash out in 2001 2002 and that was a

Painful you know the dotc crash but today when we sit here the some of the most valuable companies on the planet in alphabet meta you know these are companies that were born of that era and so I I think that what happens in the short term around crypto is you know

I take a very long View and I I encourage whether you’re a retail investor or an Institutional Investor I think if you take a long-term view about where these markets are going and why there’s so much momentum despite the self-inflicted wounds I mean again as you and I talked backstage Bitcoin is

Not that far from its all-time high right now yeah and I’m I’m very optimistic about what we’re going to see this year um BR just as we WRA up uh I was walking down the prominade yesterday and crypto has been displaced by AI as the cool kid on the block how do you

Feel about that I’m thrilled you’re thrilled why look I I think that it’s good that crypto is boring now right it’s cryp I don’t look I I think uh everything every new technology goes through a hype cycle I think AI is also a technology here to stay transformational in a lot of ways

But also not exactly clear what the business models are how it’s going to play out and I think that’s where crypto was a few years ago and I think now we’re further along and I think that’s a very positive thing for the crypto industry I’m excited about what’s going

On in AI uh I’m I’m a Voyer not a participant in that world but uh it’s going to be interesting rad always a pleasure to speak to you that was a well- win tour as always thank you so much for joining me today Round of Applause for Brad Garling CEO of r